Key Takeaways:
- The proposed changes to the Retirement Act 2003 may not apply to existing residents, creating a two-tier system.
- The new rules include weekly fees stopping when a resident exits their village, clearer maintenance responsibilities, and a new complaints scheme.
- The Retirement Villages Residents New Zealand Association (RVResidents) and the Retirement Villages Association (RVA) have expressed concerns about the proposed changes.
- The RVResidents are pushing for retrospective legislative change to ensure existing residents are protected, while the RVA is warning that the changes could heap significant financial pressure on small to medium-sized operators.
- The bill is expected to be introduced to Parliament in the middle of next year, with another opportunity for feedback during the select committee process.
Introduction to the Issue
The review of the Retirement Act 2003 has been a long and arduous process, with over 11,000 submissions received during the public consultation period. The Retirement Villages Residents New Zealand Association (RVResidents) has been a strong voice in the review, advocating for stronger protections for residents. However, the proposed changes announced recently have been met with concern from both residents and operators. One resident, who had invested time and energy lobbying politicians during the review, expressed her disappointment and frustration that the proposed benefits may not apply to her, calling it "extremely unethical, unfair, and likely to be divisive".
Reaction from RVResidents
The RVResidents president, Brian Peat, welcomed the stronger protections included in the proposed changes, such as weekly fees stopping when a resident exits their village, clearer maintenance responsibilities, and a new complaints scheme. However, he expressed concern that many of the changes only apply to future residents, leaving those under old contracts without protections. Peat warned that this could create a two-tier system, where new residents have clear rights while existing residents are left in limbo. He also cautioned that limiting reforms to new contracts could cause delay and inequity, with seniors postponing moves until new rules apply, operators prioritizing units under the new law first, and long-waiting former residents being pushed further down the queue.
Concerns about Repayment Timeframe
Peat also expressed concern about the proposed mandatory 12-month repayment timeframe, which he believed "falls far short of residents’ needs and expectations". The RVResidents have been clear that there must be a mandatory repayment timeframe, with the overwhelming majority considering three months to be fair and reasonable. Peat warned that people cannot put their lives on hold for a year or more while they wait for money they are contractually owed. The RVA also objected to the proposed repayment timeframe, arguing that it could slow development, reduce care bed delivery, and even force closures of smaller regional and charitable villages.
RVA’s Concerns about Financial Pressure
The Retirement Villages Association (RVA) executive director, Michelle Palmer, believed that the proposed changes to the act were flawed and would heap significant financial pressure on small to medium-sized operators. She warned that introducing both interest payments after six months and a mandatory 12-month buy-back period would create a "double financial hit", forcing operators to seek new credit lines and potentially pushing up resident costs. Palmer argued that the model relied on funds being tied up in infrastructure and services, not sitting idle, and operators only receive deferred management fees when new residents move in. The RVA supports paying interest if repayments take too long but opposes a fixed repayment timeframe.
Impact on the Retirement Village Industry
The proposed changes could have significant implications for the retirement village industry, with the RVA warning that they could derail the Government’s goal of encouraging the construction of more retirement homes and the associated increase in care beds. A recent report forecasts a shortage of over 11,000 retirement village units by 2033, rising to 23,000 by 2048. The RVA is concerned that the combined financial burden of the proposed changes could lead to higher fees and fewer choices for older people. The RVResidents, on the other hand, are pushing for stronger protections for residents, including retrospective legislative change to ensure existing residents are protected.
Next Steps
The bill is expected to be introduced to Parliament in the middle of next year, with the select committee process giving another opportunity for residents, families, and operators to have their say. The ministers have acknowledged the concerns raised by the RVResidents and the RVA, and it remains to be seen how the proposed changes will be refined and implemented. One thing is clear, however: the retirement village industry is at a critical juncture, and the outcome of the review will have significant implications for the thousands of New Zealanders who call retirement villages home. As Sarah Curtis, a news reporter for the Northern Advocate, noted, the issue is complex and multifaceted, requiring careful consideration and consultation to ensure that the needs of all stakeholders are met.
